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North Bay Business Journal

Monday, February 14, 2011, 4:45 am

Shareholders dispute Circle IPO; bank says stock sale ‘on track’

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    Circle BankNOVATO — A dispute has developed between shareholders of Circle Bancorp over plans for an initial public offering to raise $20 million to $30 million to expand the bank’s reach.

    According to initial IPO filings with the Securities & Exchange Commission, the bank’s current commercial lending activities tend to focus on businesses and professionals who are also depositors. As of June 30 of last year, the bank’s lending limit was approximately $6.6 million, which would increase to approximately $11.4 million if all the shares of common stock offered are sold, according to the filing.

    But an amended filing this month stated that “some of the limited partners of our controlling shareholder are attempting to effectuate a management change to implement their own business plan and, if successful, this offering will be terminated.”

    The majority of the outstanding common stock in the company is owned by Shoreline Capital Partners, L.P., a California limited partnership headquartered in Mill Valley. Its partners are Kimberly Kaselionis, president and chief executive officer of Circle Bank, Kit Cole, CEO and chairman of the board of Circle Bancorp, Deborah Milenkovitch, Stuart Cook, Frank Doodah, Diane Doodah, John Buehler and Roksanda Cerovic.

    The limited partnership in turn is controlled by its general partner, Cole Financial Ventures, which controls the election of the company’s directors. Those directors in turn oversee the selection of the officers and the management of the company and the bank.

    Ms. Cole and Ms. Kaselionis own 61.5 percent and 12.5 percent, respectively, of Cole Financial Ventures.

    When contacted about the amendment, Circle Bank spokesman Gary Tobin said, “Because we are in an SEC-mandated quiet period we cannot comment beyond what has been filed. However, from our perspective, the IPO is on track and we expect it to be approved for an effective date in the near future.”

    When the initial filing on the IPO was made in October, Ms. Cole said “the main reason for going public now is that we can’t think of a better time for a healthy bank to be raising capital. Most companies that are raising money are trying to dig themselves out of a hole, and that means investors are buying shares of broken banks. In this case they are getting management that has been able to thrive during the worst period of banking since the Depression, a management that has been able to manage risk control.”

    She spoke of plans to expand into the East Bay and South Bay and said the organization was hiring people with experience in those regions to have them in place.

    The amended filing stated that at a Shoreline Capital Partners meeting on Nov. 18 of last year, a majority of the limited partners of Shoreline voted to begin the process of removing Cole Financial as the general partner of Shoreline.

    In their vote on Nov. 18, the limited partners identified Simone Lagomarsino, formerly chief executive officer of Kinecta Federal Credit Union, as a successor general partner, and a filing was made with the Department of Financial Institutions and the Federal Deposit Insurance Corporation in late December for this change and for the new general partner to replace Ms. Cole as the company’s chief executive officer and to implement their own business plan.

    However, the Circle filing contends the vote of the limited partners “may not have been in technical compliance with the terms of the SCP partnership agreement which appears to require, among other conditions, the approval of a successor general partner at the same time the removal of the current general partner is approved, and at least one limited partner claims to have not received notice of that meeting.”

    Other parties disagreeing with the effort to remove Ms. Cole filed protests with the DFI and FDIC. Under federal law, the FDIC has up to 60 days to evaluate the protests and process the application, but may extend the processing for up to a total of six months.

    There is also a question as to how the shares would be sold if the IPO goes through.

    When Circle initially filed with the SEC about putting out an IPO, it maintained that it would sell its own shares without a broker.

    However, B. Riley, a research trading and investment banking firm, stated that they are “in discussion with Circle Bancorp” regarding representing it with the IPO.  Circle has indicated in a separate filing that it “may engage brokers and/or dealers to serve as placement agents to assist us in the offer of the shares of our common stock.”

    Headquartered in Novato, Circle Bank has 56 employees with branches in Marin, San Francisco and Sonoma counties. The bank was established in 1990 under the name New West Thrift and Loan Co. It changed its name in 1998 to Novato Community Bank and in 2003 to Circle Bank.

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    Comments

    1 Comment

    1. February 26, 2011, 9:41 am

      by SonomaBanker

      Wasn’t Kit Cole significantly involved with the Tamalpais Bank failure a couple years ago? And aren’t key Officers of Circle Bank related to Cole? Why on earth would you give more money to a family of failed banks? Who do you think you will be approved to purchase when most bank targets today are under Regulatory Actions.

      Did anybody learn from the recent Bay Commercial, Charter Oak failed merger in Napa a couple weeks ago?

      Wake up North Bay Bankers!


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